Vera Bradley's stock falls 10% after handbag maker's earnings fall short of estimates

By Ciara Linnane

CEO says company needs to work on branding, product assortments, and store environments

Vera Bradley Inc.'s stock tumbled 10% Wednesday, after the maker of handbags and accessories posted weaker-than-expected fiscal fourth-quarter earnings as it continues to work on a turnaround.

The Fort Wayne, Indiana-based company posted a loss of $1.9 million, or 6 cents a share, for the quarter to Feb. 3, narrower than the loss of $28.2 million, or 91 cents a share, posted in the year-earlier period.

Excluding one-time items, the company's adjusted per-share loss came to 3 cents a share, missing the FactSet consensus for EPS of 13 cents.

Revenue fell to $133.3 million from $147.1 million a year ago, below the $136.0 million FactSet consensus.

Chief Executive Jackie Ardrey said the company had ended the first year of a turnaround program with better discipline on gross margin management and cost controls. But she acknowledged more change is needed.

"Our recent sales results demonstrate the need for change in our branding, product assortments and store environments - the exact areas that Project Restoration addresses to position Vera Bradley, Inc. for long-term, profitable growth," Ardrey said in a statement.

Sales were also hurt by store closures and a still price-sensitive consumer.

"Customers responded to some of our latest product collaborations and to our newer product offerings like leather, but overall, they continued to be more discriminating with their discretionary spending in light of the macroeconomic environment," she said.

Sales at the company's Pura Vida jewelry unit fell 21.6%, driven by weakness in e-commerce and wholesale revenue, as marketing costs remained high and failed to resonate with customers.

"While we are actively addressing revenue stabilization and marketing effectiveness at Pura Vida, our key focus is managing the business for profitability," said Ardrey.

Vera Bradley is now focused on restoring brand relevancy targeting casual and feminine consumers in the 35 to 54-year age bracket. It is refocusing on areas it believes it's best at, including travel and bags, using upgraded fabrics and prints.

The company is now expecting fiscal 2025 EPS of 54 cents to 62 cents and revenue of $460 million to $480 million. The FactSet consensus is for EPS of 62 cents and revenue of $430.6 million.

The stock has gained 26.5% in the last 12 months, while the S&P 500 has gained 34%.

-Ciara Linnane

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03-13-24 1025ET

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